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What if it were to use Skinput, http://www.chrisharrison.net/index.php/Research/Skinput, but the projector is on the watch, such that you flip the top of the watch up, to get a decent angle. Integrating this Skinput even without a projector would probably work. Might as well squeeze a Kinect in there, and a dash of Revel, while they're at it. 8-)